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Agricultural lending concepts ST

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Agricultural lending concepts ST & LT Loans for Agriculture Sushrut V. Sardesai DGM / MoF CAB, RBI, Pune * Classification of Loans Based on purpose Production credit ... – PowerPoint PPT presentation

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Title: Agricultural lending concepts ST


1
Agricultural lending concepts ST LT Loans for
Agriculture
  • Sushrut V. Sardesai
  • DGM / MoF
  • CAB, RBI, Pune

2
(No Transcript)
3
Classification of Loans
  • Based on purpose
  • Production credit
  • Marketing loans
  • Consumption loans
  • Investment credit
  • Based on tenure
  • Short term
  • Medium term
  • Long term

4
Classification of Loans
  • Based on security
  • Secured loans
  • Primary security
  • Collateral security
  • Mortgage
  • Hypothecation
  • Third party guarantee
  • Unsecured loans

5
Classification of Loans
  • Based on approach
  • Individual approach
  • Area approach
  • DIR loans

6
Agricultural Costs
  • Recurring
  • Investment specific

7
Crop Loan System
  • Cost of cultivation
  • Eligibility not to depend on ownership but on
    tilling of land
  • Loan to be secured by hypothecation of crop
  • Disbursement recovery of loan based on crop
    production schedule
  • Quantum of loan based on crop variety, season and
    irrigation status
  • Recovery linked with marketing

8
Crop Loan System contd .
  • Cost of cultivation
  • Scale of Finance
  • DLTC
  • DCC/BLBC

9
Tools of ST Financing
  • KCC
  • SCC
  • GCC
  • SB-cum-OD
  • SHG
  • JLG
  • Farmers Club

10
Causes of poor repaying capacity
  • Small land holdings
  • Low productivity
  • Low / fluctuating prices
  • High family expenditure / diversion of funds for
    unproductive purposes
  • Lack of adoption of improved technology and
    modern package of practices
  • Poor management of farm resources

11
Risk factors in Agriculture
  • Production risk
  • Technological risk
  • Ignorance / illiteracy related risk
  • Weather uncertainty risk
  • Price uncertainty risk
  • Farmers health related risk

12
Risk mitigation measure
  • Crop insurance
  • Asset insurance
  • Health / Life insurance
  • Tie-ups for recovery
  • Marketing loans / Warehouse receipt finance
  • Formation of Farmers Clubs
  • JLGs / SHGs

13
Classification based on PSL
  • Direct Agriculture
  • Loans to individual farmers, groups of individual
    farmers including SHGs / JLGs provided banks
    maintain disaggregated data on such loans
    engaged in Agri. and Allied Activities, viz.,
    dairy, fishery, animal husbandry, poultry,
    bee-keeping and sericulture (up to cocoon stage)
  • Indirect Agriculture
  • Loans to corporates, partnership firms and
    institutions engaged in Agriculture and Allied
    Activities dairy, fishery, animal husbandry,
    poultry, bee-keeping and sericulture (up to
    cocoon stage)

14
Direct Agriculture
  • Short-term loans to farmers for raising crops
  • MT LT loans for agri. and allied activities
  • Purchase of agri. Impl. and machinery
  • Irrigation and other dev. activities
  • Allied activities
  • Pre-harvest and post-harvest activities,
    (viz., spraying, weeding, harvesting,
    sorting, grading and transporting of their own
    farm produce)
  • Loans up to 25 lakh against pledge /
    hypothecation of agri. produce (including
    warehouse receipts) for a period not exceeding 12
    months.

15
Direct Agriculture contd.
  • Loans to SF/MF for purchase of land for
    agricultural purposes
  • Loans to distressed farmers indebted to
    non-institutional lenders
  • Loans to PACS, FSS and LAMPS for on lending to
    farmers for agri. allied activities.
  • Loans to farmers under KCC Scheme.
  • Export credit to farmers for exporting their own
    farm produce

16
Indirect Agriculture
  • Short-term loans for raising crops
  • MT LT loans for agri. and allied activities
  • Purchase of agri. Impl. and machinery
  • Irrigation and other dev. activities
  • Allied activities
  • Pre-harvest and post-harvest activities,
    (viz., spraying, weeding, harvesting,
    sorting, grading and transporting of their own
    farm produce)
  • Loans up to 25 lakh against pledge /
    hypothecation of agri. produce (including
    warehouse receipts) for a period not exceeding 12
    months

17
Indirect Agriculture contd.
  • Export credit to corporates, partnership firms
    and institutions for exporting their own farm
    produce
  • Loans upto Rs. 5 crore to Producer Companies set
    up exclusively by only SF/MF under Part IXA of
    Companies Act, 1956 for agri. and allied
    activities.
  • Bank loans to PACS, FSS and LAMPS other than
    those covered under direct Agriculture

18
Other indirect agriculture loans
  • Loans up to 5 crore to coop. societies of farmers
    for disposing of the produce of members.
  • Loans to Custom Service Units managed by
    individuals, institutions or organisations and
    undertake farm work for farmers on contract basis
  • Loans for construction and running of storage
    facilities (warehouse, market yards, godowns and
    silos), including cold storage units designed to
    store agriculture produce/products

19
Other indirect agriculture loans contd.
  • Loans to MFIs for on-lending to farmers for
    agricultural and allied activities subject to
    conditions
  • Loans sanctioned to NGOs, which are SHG Promoting
    Institutions, for on-lending to members of SHGs
    under SHG-Bank Linkage Programme for agricultural
    and allied activities. ROI /lt Base Rate 8
  • Loans sanctioned to RRBs for on-lending to
    agriculture and allied activities

20
Potential Activities
  • Fruits and Vegetables
  • Floriculture
  • Medicinal and Aromatic Plants
  • Minor Irrigation Schemes - development
    management
  • Livestock based Schemes - Dairy, Poultry,
    Fisheries, etc.
  • Land development activities - soil water
    conservation
  • Mechanisation of Agriculture
  • Organic Farming
  • Bio-fuel and TBO seeds
  • Agro-processing
  • Seed and Planting material production
  • Agri-clinic and Agri-Business Centres
  • Post harvest and Marketing Infrastructure
    Development, etc.

21
  • Thank You
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